Penny stock is stock that usually sell under a $1 or at a very low price, under $5 and is usually sold outside of the major market exchanges. Its market capitalization is low as well. Market capitalization is the number of outstanding shares times the price/share of stock. Penny stocks are highly volatile because of the risks associated with low liquidity. However, it is a way to invest a little bit of money and get a rough handle on playing the stock market. Money can be made; in fact, one of my classmates in Graduate School paid for his entire tuition from penny stock, including buying himself a new car when he graduated.
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